Financial Management MCQ

Financial Management MCQ

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  • 21st Nov, 2020

Financial Management MCQ & QUIZ

1) A bond is said to be issued at premium when

  • A. Coupon rate>Required returns
  • B. Coupon rate=Required returns
  • C. Coupon rated) None of the above
  • D. All of the mentioned

2) _________ are financial assets.

  • A. Bonds
  • B. Machines
  • C. Stocks
  • D. A and C

3) The proposal is accepted if the profitability index is more than

  • A. Zero
  • B. One
  • C. Three
  • D. Five

4) If cash inflows are not uniform, the calculation of pay-back period takes a

  • A. Favourable Position
  • B. Common Profit
  • C. Cumulative Form
  • D. All are Correct

5) Capital Employed is

  • A. Cash + Bank
  • B. Bank
  • C. Assets + Cash
  • D. Shareholders Funds + Long Funds

6) Investment is the _________

  • A. net additions made to the nation’s capital stocks
  • B. person’s commitment to buy a flat or house
  • C. employment of funds on assets to earn returns
  • D. employment of funds on goods and services that are used in production process

7) Agency cost consists of

  • A. Monitoring
  • B. Binding
  • C. Opportunity and structure cost
  • D. All are Correct

8) Which of the following falls under Profitability ratios?

  • A. General Profitability ratios
  • B. Overall Profitability ratios
  • C. Comprehensive Profitability ratios
  • D. A and B

9) Which is the traditional method of Capital budgeting?

  • A. Accounting Method
  • B. Pay out Method
  • C. Pay back Method
  • D. All are Correct

10) The Present Value of all inflows are cumulated in

  • A. Order of Time
  • B. Order of Sales
  • C. Order of Cash
  • D. Order of Investment

11) The only feasible purpose of financial management is

  • A. Wealth Maximization
  • B. Sales Maximization
  • C. Profit Maximization
  • D. Assets maximization

12) Present value tables for annuity cannot be straight away applied to varied stream of cash flows.

  • A. True
  • B. False

13) The coupon rate is another name for the ______.

  • A. yield to maturity
  • B. current yield
  • C. market interest rate
  • D. stated interest rate

14) Net working capital is the excess of current asset over _______.

  • A. Current liability
  • B. Net liability
  • C. Total payable
  • D. Total liability

15) GST is a consumption of goods and service tax based on.

  • A. Destination
  • B. Dividend
  • C. Destiny
  • D. Duration

16) The relationship between the cost of equity and financial leverage in accordance with MM proposition II can be expressed by

  • A. R = Equity/Debt x 100
  • B. rE = r0 + (r0 - rD)(1 - TC)
  • C. R = Equity/100
  • D. R = Equity/Income

17) The term "capital structure" refers to:

  • A. long-term debt, preferred stock, and common stock equity
  • B. current assets and current liabilities.
  • C. current assets and current liabilities.
  • D. shareholders' equity.

18) Financial management is mainly concerned with________

  • A. Arrangement of funds
  • B. Profit maximization
  • C. Efficient Management of every business
  • D. All aspects of acquiring and utilizing financial resources for firms activities

19) Treasury bills are traded in the _______.

  • A. money market
  • B. capital market
  • C. government market
  • D. regulated market

20) EBIT is usually the same thing as

  • A. funds provided by operations
  • B. earnings before taxes
  • C. net income
  • D. operating profit

21) Financial management process deals with

  • A. Investments
  • B. Financing decisions
  • C. Both a and b
  • D. None of the above

22) Factoring involves

  • A. Sales ledger management
  • B. Purchase and Collection of debts
  • C. Provision of Specialised Services relating to credit investigation
  • D. All are Correct

23) Working capital management is managing ________.

  • A. only short term assets
  • B. long terms liabilities
  • C. long term assets
  • D. short term assets and liabilities

24) Future value interest factor takes _______.

  • A. Compounding rate
  • B. Discounting rate
  • C. Inflation rate
  • D. Deflation rate

25) Treasury bills are traded in the _______.

  • A. money market
  • B. capital market
  • C. government market
  • D. regulated market

26) Savings accounts are ______ but are not ______.

  • A. negotiable; liquid
  • B. liquid; marketable
  • C. marketable; liquid
  • D. liquid; personal

27) The primary goal of financial management is ________

  • A. to maximize the return
  • B. to minimize the risk
  • C. to maximize the wealth of owners
  • D. to maximize profit

28) The expansion of CAPM is _________.

  • A. Capital amount pricing model
  • B. Capital asset pricing model.
  • C. Capital asset printing model.
  • D. Capital amount printing model.

29) Operating leverage can be computed by

  • A. Sales/EBIT
  • B. Fixed Cost/EBIT
  • C. EBIT/Fixed Cost x Capital Employed
  • D. %change in EBIT/% change in Sales

30) Dividends are paid________.

  • A. yearly
  • B. quarterly
  • C. semi-annually
  • D. monthly

31) Which is called as Dividend Ratio Method?

  • A. Debt Equity Method
  • B. Dividend Yield Method
  • C. Equity Method
  • D. Asset Method

32) Which formula may be used for 'EPS'?

  • A. Net Profit/100 x Share Capital
  • B. Net Profit/Sales
  • C. Dividend/Net Profit x 100
  • D. Net Income - Dividend on Preferred Stock/Average outstanding Shares

33) Efficient frontier comprises of

  • A. Inefficient portfolios
  • B. Efficient portfolios
  • C. Portfolios that have positively correlated securities
  • D. Portfolios that have negatively correlated securities

34) Heterogeneous cash flows can be made comparable by

  • A. Discounting technique
  • B. Compounding technique
  • C. Either a or b
  • D. None of the above

35) The ratio analysis is helpful to management in taking several decisions, but as a mechanical substitute for judgment and thinking, it is worse than useless.

  • A. True
  • B. False

36) Earning Yield computed by

  • A. EPS/Profit x 100
  • B. EPS/Market Price
  • C. Paid up value of Share/100
  • D. EPS/Current Market Price Per Share

37) Market value of the shares are decided by ________.

  • A. shareholders
  • B. the government
  • C. the investment market
  • D. the respective companies

38) Required rate of return>Coupon rate, the bond will be valued at

  • A. Premium
  • B. Par value
  • C. Discount
  • D. None of the above.

39) What does financial leverage measured?

  • A. No change with EBIT and EPS
  • B. The sensibility of EBIT with % change with respect to output
  • C. The sensibility of EPS with % change in the EBIT level
  • D. % variation in the level of production

40) In the _______________, the future value of all cash inflow at the end of time horizon at a particular rate of interest is calculated.

  • A. Risk-free rate
  • B. Compounding technique
  • C. Discounting technique
  • D. Risk Premium

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